Newfoundland CMHC Insurance
In Canada, home buyers with less than 20% down payment require mortgage default insurance, or CMHC insurance. Mortgage default insurance protects lenders in the event a home buyer defaults. Thanks to this protection, lenders can offer lower mortgage rates for mortgages with lower down payments.
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A guide to Newfoundland CMHC insurance
Jamie David, Sr. Director of Marketing and Mortgages
CMHC insurance premium rates and regulations in Newfoundland are the same in the rest of Canada. Insurance premium rates vary from 2.80% to 4.00% of the mortgage amount. Additional federal policies on CMHC insurance also apply:
- CMHC insurance must be purchased for all homes with less than 20% down payment.
- Homes purchased for more than $1 million are not eligible for CMHC insurance, therefore requiring homeowners to put more than 20% down.
- The maximum amortization period on CMHC insured mortgages is 25 years.
- Homes sold over $500,000 can no longer be purchased with a 5% down payment. The new minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.
The CMHC insurance premium is added to the mortgage amount and is paid off through monthly mortgage payments over your amortization period.
Sample Calculation for CMHC insurance in Newfoundland:
For a $300,000 home with a $40,000 down payment and an amortization period of 25 years. Your insurance premium would be calculated as follows:
- $40,000 (down payment) ÷ $300,000 (home price)
= 13.33% (down payment percentage) - $300,000 (home price) × $40,000 (down payment)
= $260,000 (mortgage before CMHC) - $260,000 (mortgage before CMHC) × 3.10% (CMHC tax rate)
= $8,060 (CMHC insurance premium) - $260,000 (mortgage before CMHC) + $8,060 (CMHC insurance premium)
= $268,060 (total mortgage)
You will pay the insurance premium of $8,060 in your monthly payments.
Mortgage default insurance rates with a non-traditional down payment - Newfoundland
Using non-traditional sources of down payments will incur a rate increase on your insurance premium for down payments from 5% - 9.99%. Non-traditional sources of down payment include borrowed funds and gifts from non-immediate family members.
| Down payment (% of home’s price) | 5% - 9.99% | 10% - 14.99% | 15%-19.99% | 20% or higher |
| CMHC insurance premium | 4.50% | 3.10% | 2.80% | 0% |
Mortgage default insurance rates for self-employed, non-verified income - Newfoundland
Self-employed home buyers without 3rd-party income validation are should be aware of additional regulations. Self-employed home buyers must pay at least 10% down payment and the insurance premiums rates on down payments from 10% - 19.99% are higher than those for regular applicants.
| Down payment (% of home’s price) | 5% - 9.99% | 10% - 14.99% | 15%-19.99% | 20% or higher |
| CMHC insurance premium | N/A | 4.75% | 2.90% | 0% |